Tuesday's Brew - Jan 2

Enjoy your fresh morning coffee with our summary of the market outlook for the day and a medley of important information you should find useful. U.S. equity markets are closed today and the bond market closes at 2 p.m., in honor of Gerald R. Ford, who is to be laid to rest today.

OVERSEAS MARKETS

The Russian market will be closed the entire week, ahead of the celebration of Russian Orthodox Christmas on January 7th. Markets in Japan, China and Pakistan are closed for holidays Tuesday as well.

In Hong Kong, the Hang Seng Index soared 1.7% and mainland Chinese indices rocketed even further, benefiting from an appreciating yuan and central bank moves to relax currency controls in 2006. Investors are also speculating that Hong Kong listed companies could list shares on mainland markets. The Hang Seng Index climbed 34% in 2006, while China funds attracted $11.2 billion in net inflows last year, accounting for half the inflows brought in by emerging market stock funds, according to Emerging Portfolio Fund Research. Also, a large Chinese bank, Industrial & Commercial Bank of China Ltd., moved to acquire 90% of PT Bank Halim Indonesia today. Taiwanese, Indonesian and Indian markets also advanced on Tuesday.

European markets resumed trading Tuesday, with the DJ STOXX 50 and the FTSE 100 rising about a percentage point each through midday, despite a reading that European manufacturing growth rose less than expected in December. The Royal Bank of Scotland Group Plc said today its manufacturing index fell to 56.5, versus 56.6 in November. A reading above 50 shows expansion, however, so the result did not have a significant impact.

ECONOMIC DATA & ANALYSIS

There is no significant economic data set for release today in the U.S., but we advise you to see our weekly event planner, "The Greek's Week Ahead," to prepare for the remainder of the week.

COMMODITY MARKETS

Gasoline leads all commodities futures higher today, rising approximately 1.9% in early activity, as we speculate purchasing is being driven by a new weather forecast that indicates 2007 could be the warmest year in history. Warmer weather patterns lead to more driving activity globally, and early seasonal starts to summer vacationing may result as well. On a secular basis, cheaper automobiles available in India and China should significantly boost gasoline demand over the long term, barring significant penetration of alternative technologies such as hybrid vehicles and fuel cell driven engines. Crude oil futures are also up 0.7%, but natural gas is lower 1.7% on that same weather forecast. Gold is higher 0.6% today, as the dollar continues to weaken and after a threat by Iran's President Ahmadinejad, that any military action against his nation would be met with a "historical slap in the face."

STOCKS IN THE NEWS

U.S. Equity markets are closed today. We hope you found this abbreviated version of "Today's Morning Coffee" useful and insightful, and ask you to join us tomorrow morning for our regular issues of "Today's Morning Coffee" and "Your Wake Up Call."